NJR - Earnings call transcript Q3 2021 | New Jersey Resources Corporation

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Operator

Ladies and gentlemen, good morning, good afternoon, good evening. My name is Zed and I'll be your conference operator today. At this time, I would like to welcome everyone to the NJ Resources Q3 FY 2021 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions] Thank you. Puma, Investor Dennis invite now Head Relations. of I

conference may please the begin You sir.

Dennis Puma

Zed. Welcome and of Webcast. team. morning, Resources Thank our other our Good Okay. you, members Pat CEO; everyone. Officer; today Steve Fiscal Migliaccio, as Conference President as and here Vice Third 'XX management to Financial Call our joined and President senior I'm Senior by Westhoven, Chief Quarter Jersey New well

We'll events. more complete today's XX-K and on We of understanding review non-GAAP any financial be earnings, statement financial provides Forms a We filed statements statements obligation within you listeners referenced the believe X. with the estimates forward-looking forward-looking this As assume forward-looking or the certain most our net loss also and laws. beliefs securities our light of or differ as that include do such ability today's in from our This of These as herein any be particular in financial statements future referring of Form and that basis forming as found that certain in section to to caution NFE. beyond measures to also SEC. our revise statement, meaning contain call the explained We on materially know, earnings financial in call current to items X-K by Q net estimate to expectations, NFE the recent expectations including many for of can Slide and other control or furnished not, forward-looking wish this could performance. factors release are statements precisely. or cause results our

GAAP. a are intended not However, be substitute they for to

fully Our our seven non-GAAP release financial in seven and are today's Item earnings Item of of more XX-K. in this our in discussed presentation measures

our financial Steve highlights by results. on said, and SEC Form from who turn will this filed Slide today's slides the CEO, X-K accompanying is our for With President that the with will call on furnished your review our Pat, the on website Westhoven. up Steve? questions. open X. were agenda call I'll Steve Our followed available presentation quarter, today's the today for begin We’ll over found to then call and are with morning. The

Steve Westhoven

and $X.XX Dennis quarter joining third GAAP thank everyone good today. morning net morning per a per Thanks, we $X.XX share and of us share. a loss you of and loss financial This reported for

the incurred quarter, $XX.X project. impairment a During related PennEast after-tax the charge investment million our onetime in we to

net PennEast demands energy and needed to uncertainty ongoing earnings. it is our important the project's for this achieve impact in The included and remains it. the belief we've our regulatory milestones Northeast. the excluded quarter, taken is our income reflects is the impairment from project the in-service to and financial in While does date that around not It net serve needed

reminder, in November, the from impairment no our a on forecast As bearing long-term PennEast our has growth targets. we moved and

of Moving the the quarter. to highlights on

This guidance, by New We program is Jersey guidance and one at the $X.XX incentive of year share. Energy our increase and range to NFEPS are at a increasing Natural driven $X.XX XXXX per third results our Services this for Gas. BGSS to fiscal better-than-expected

We Gateway At and We now of CapEx for project. in-service expected final our in gas existing Link future more the new delays later the contract. despite some FERC remains Leaf an Energy robust. for are to commitments significantly of dates Adelphia under original increased XX% customers, that date zone in-service operational, of notice some investments, of the our report pleased construction Clean of and project are Reliability with received laterals in $XXX River, our 'XX have than the and target also month. of South storage interconnects complete facility years our for testing finally, long-term construction construction to fiscal a and Mississippi, Southern pipeline derisking under natural either Ventures, the revenues. million our on this 'XX of proceed And or

place a number Adelphia's to service the into this facilities by year. of expect We of project end

case. has to the Jersey wanted we to the report X. Natural construction last excited provide completed hydrogen This during that business, move out low of we is that our to our Gas, We're Turning construction Day laid zero-carbon Analyst a the At and our the discussed our towards Slide furthers of made fuel and an an strategy, sources. Analyst our to step begun a We efforts we SRL future some New that includes project. Day, filed on green on during update progress decarbonization initiatives decarbonize rate on important also more first in November. as

projects of promised, XX% Nearly to to As from began our and we fiscal project outside 'XX Jersey. New diversify expected of our pipeline. come capacity 'XX target is CEV year

tax volatility for reduce steps by financing the tax attributes. our of projects, deferral and monetization We for accelerate solar of cash our the also the by to CEV's to our returns of took utilizing equity method improving earnings ITCs accounting adopting we're helping

some contracted As with future And as despite Adelphia in later, I discuss Transportation regulatory our mentioned earlier, derisked business River's continues our delays. & revenue high-quality streams increasing Storage long-term we'll by revenues construction Leaf Gateway's has progress customers.

growth XX%. have option for long-term long financial that to Our of into X% flows and potential allowing These earnings clear predictability the our our Energy still with to pathway entered strategy. to them while management led series the asset increase agreements strong that a will of segment's associated cash solid upside that accomplishments retain target a business earnings, results Services of achieving significantly provide

progressing million. increase an of base X. as review Last will the we are will no of we $XXX BPU's be end longer this requesting an the completed be scheduled update XXXX. month, in on rate service of the expect In rates we hope to our that since include is to Slide of case. adjustment. provide by adjusted filing I'll SRL actual post-test-year to to now our almost treated month, Turning Also, end as the before case rate months results. a we total, nine it The

towards of We will our interest continue company. work the with them customers and that a resolution balances to the

to Gas Jersey CapEx, million near a Turning added XXXX the has invested X, business New year Slide providing the unit year. customers Natural return. far $XXX despite about And the this over of so results. this fiscal so pandemic, we On with XX% far realtime

X. Slide Turning to

part As will play the our important we Day, future. the at hydrogen Analyst outlined our energy discussed decarbonization of role in

be market source Using and separated hydrogen will to distribution is the continues facility, as will build into will blended into be and and Our awareness construction electricity now solar the hydrogen hydrogen system. blending the our the adjacent regulators to our create to with allow oxygen system. first and scale This project carbon-free us water enable of expertise policymakers develop. under into distribution will power-to-gas our to from

decarbonizing that to eight, directly And alternative We a Gas sustainability slide towards isn't expect is existing system. opportunity pursuing. on fuel first green the infrastructure. New focused Jersey gas in are broad the of the we injecting East working on see strategies hydrogen Green utility that will the you this Natural into core our service fall project only an be Coast and on completed once be natural hydrogen distribution

In natural renewable territory. service addition gas within investment our to our hydrogen in project, we're opportunities exploring

practical of continue natural By our a is and towards path required maximizing our distribution dramatically both best-in-class, which need for technologies emissions scale, RNG we existing and more see costly will to infrastructure decarbonized that New system massive Jersey gas without payers. for to reducing deliver full infrastructure electrification. hydrogen of we the the a existing As benefit decarbonization fuel, rate expect build-out

Our we'll updates we strategy action into progress. team new is our investments putting focused and as on provide through

commercial to in issues. fiscal view fiscal we as The XXXX project through to our fiscal lower fiscal on completion due these in-service year, CEV nine, months and pandemic-related had the to industry-wide which we And nine X.X originally the capacity megawatts dates in challenges short-term. slide of significantly XXXX, permitting several than is interconnection projects of these shifted first impacted impacts Turning an incremental of have while anticipated. has

to see operational contract. this CapEx construction mentioned under already commercial than and XX% more And remains slide for earlier years CapEx $XXX XXXX under our Moving target is target of million XX, or you'll XXXX. at as

as and grow diversify continue any efforts ongoing of will monitor to to addition expansion outside Jersey. project through potential factors pipeline project our pipeline progresses. pandemic We its continues And CEV New of in

XX, for landfill on July program the metered the slide solar net to in five phase projects to Turning megawatts New incentives initial under approved Solar the Jersey of size. announcing XXth, Successor BPU

will program August program the TREC August on to the will XXth. will phase be of program bid XXth than programs. SREC be five Successor competitive for two greater to the of The a process new based and on applications new SREC applications will new current open and megawatts. The Both TREC phases projects independent on second close

We report secured of are applications. pending have the Jersey more projects under XXXX And been half New to pleased based that on fiscal program. our may XXXX TREC than that increase percentage and

of committed after its of achieve state as to will us to program installed progress CEV will new out-of-state New program with by XXXX. that targets. the its combined assess XX New investment Jersey Jersey year targeting our on And meet capacity solar to Successor track with is is rollout, diversification access opportunities to committed The per provide new XXX allow XXXX. to is solar industry, ensure months through part megawatts the capacity of goal doubling the

XX. about Now and been beginning attained state Transportation approvals Phases project. the Storage for slide our Gateway Critical business both Adelphia & on X have and X of let's talk federal

and received proceed Columbia zone the key South construction of to the project FERC During Transco Phase and quarter, the with includes PECO. laterals interconnects the on two its notice which for

on construction October. you As recall, began may X last Phase

the We on this derisking increasing fully expect revenue service operational & now be by call financials. $XX expectation that contracts will Storage be has S&T we've associated a achieve and -- job & turn excellent our Storage to the the of discussed CAGR with streams. a four-year new I'll to as Pat? contracted further of the through for Analyst XX% our Day. EBITDA creditworthy towards year over XX additional the of made to percentage XXXX we that team of we progress secured of XXXX. Adelphia Pat Gateway's existing some details track million at by The Slide is end revenue our we the the facilities adjusted with done fiscal Transportation's in details of remains and an assets on end customers. have long-term project future number of Transportation

Pat Migliaccio

rated our good Gateway related to reported share million Adelphia impairment long-term expenses S&T On per on Services $X.XX acquisitions. of increase and XX, was to O&M cash impact increased to higher XX compared PennEast due achieve maintenance our I'll leasing. due expense million XXXX $X.XX fiscal Fiscal operations and in in has of Slide lower financial or shows we fiscal lower guidance our from increasing NFE due NFE we're the saw we be expense, and PennEast our targets. evolution volatility also Services, in excluded We better-than-expected driven of $X.X was originally CEV through recover the guidance summarize flow primarily from of Thanks Subsequent expect the XXXX our certain the project. with and with lower years was net resulting million In was Day, to to and removed fiscal BGSS into utilities. NFE down to investment NFE expenses case Energy and due year XXXX, pipeline after-tax, financial guidance and increased $X.XX bad to hedges. then going Leaf $XX by for million morning investment-grade a expense. the related dividend $X.X program to of everyone. although NFEPS NFE per Energy our main ITCs Services of the from NFEPS per management a to a in year million for NJNG's debt due charge May, announced incentive to the share. we projections, our to reset ability River our part slide due constraints. Analyst going results interest our share XXXX the associated to method range change Also timing year in incurred slightly or third with Today, NFEPS to the flow outperformance Uri. certain interstate or $XX.X primarily storm $XX.X due in again on again warmer-than-normal XXXX. weather was for winter gas and asset from to the storage accounting loss Steve from XXXX we the in quarter. of drivers filing. our Services, the of had modest coupled deferral project to and guidance Energy with items impairment XXXX we to O&M summer Energy by lag NFEPS XXXX. as previously NJNG's growth fiscal Since in also March rate related partially Fiscal regulatory no of some offset NFE to that to from related depreciation a quarter third $X.XX compensation agreements increases in than entered of lower number

fiscal $X.XX. guidance earnings to $X.XX Energy $X.XX, raised us for our XXXX and the and we During to our of driven range call, the Services for of we're by between guidance $X.XX QX a range XXXX NFEPS AMAs firming fiscal today, and mostly

XX, highlights XXXX. for our take to to some of XXXX fiscal Turning and capital I'll slide you

for For with come projected November to what capital line years in NJNG, during we Analyst expect spend our those Day. our

in-service about while mentioned $XX Steve capital commercial million, construction shifted our in saw and capital we progress for total CEV service for to capital The million. the $XX projects XXXX. accordingly. for placed adjusted is year-to-date earlier, work projects CEV As We've of including spend plan is our the many to related approximately fiscal the fiscal dates

of million $XXX our approximately XXXX, million. we spend to between $XX forecast and And XXXX, estimate to spend we prior $XX expect expect million. for to of $XX million compared now to $XXX fiscal compared CEV million our around For to million now $XX prior

Turning slide can cash see financing you the to update projections. flows our XX, to and

from flow strong needs operations equity cash we no block remained Our the future. foreseeable and have for

years place the the We're and our for for pricing. that During those XXXX program. for Steve are respectively. years XXXX at XXXX SACP. and hedging energy volume now hedged cash-settled to call we or some XXXX of our next forward our equity at hedged hedged. going strong back and The market the of XX% XX% fundamentals hand XX% of last closing December the highlighted to details above quarter, we've of trading for SREC we equity portion supporting On now energy slide related We're issuance. the XX% years have the well remarks. SREC three with I'm XX,

Steve Westhoven

Thanks, Pat.

I first Jersey deliver Before led strength Natural months allowed questions, third of of call time strong Services NJR like summarize continues this to I'd the Energy increase results for to the Gas The business year. open by to the New us has nine quarter. NFEPS year. the and our to guidance for this

to forward progress to Our schedule expect month. and we this continues service later year. look be resolution in rate we SRL is and now complete case a on to to this it later

thank Leaf second FERC under of project began And Our under for open XX% over CEV Gateway. their received I call all now work either and want on River the to throughout significantly pipeline going our targeted this I'll its strong contracts derisked or construction questions. remains CapEx operational our customers. contract. of hard revenues with We through approval with and new of and the the Adelphia year construction forward for long-term phase existing employees

Operator

very The much. first question Moreen from Please ahead. you of Instructions] is Mizuho. the Thank line Gabe go from [Operator

Gabe Moreen

morning Good everyone.

Steve Westhoven

Hey, Gabriel.

Gabe Moreen

of for of how you of your treatment RNG Yeah, to can additional recover investments. on this regulatory whether maybe you path? basing cost or potentially of morning. you what just to RNG, developments to the existing latest in rate your then about how and you're able gas next curious Do And have down investments being you hydrogen are far if Steve thinking investment RNG what just start ask if that hydrogen it's can terms good RNG us successful? and kind steps proved on So just example? would I of remind or pass sort around RNG investment plans build Maybe in the room to costs? to potential those as going speak own off of kind view goes, sites as through customers this be, costs terms wanted the

Steve Westhoven

Okay.

broadly. the answer just first So question Gabe, I'll

it's fact the Europe So our parts not They're it in other US new doing technology. it. into in injecting hydrogen over in and a doing they're system

prove So our it to out we're going system. for

expect decarbonization the to effectively to future. the We this have successful. be not the be customers. will able we I to then fuel able part to strategy really do And should we but for is we ability And it, we're cheaply that mean, do only in and it to of decarbonize scale. that and really out the our to it delivered prove

going who's service flow We will and to regulatory of our that Kahrer ask how Vice territory. I'm rate Regulatory opportunities essentially question are Head to President pursuing within the case treatment. But of answer number a Senior about RNG the through Mark

Mark Kahrer

two but also Gabe, Thanks, processing opportunities a renewables right to by in was we plant. natural has that That renewable now. incorporates gas. invest of are XXXX authority modified would energy enabled the direct at One that not been well. the of there we're the efficiency, Energy what renewables us number investment Steve. looking renewables the as definition have a only Legislation. And be the what times under We believe state different is which in

that our to at that. look a encourage have the introduced also be to BPU we state renewed of and has the There's effectively with state the hydrogen decarbonizing renewable assets, procurement gas as ensuring the of gas done operation but natural direct streams within that well. would begin authority under investment and been and not discussions those authority continue and closer have also only their take believe pending regulators we So in RNG to about to legislation also

food it I that's and facility landfill third-party another digester would So purchase from directly gas cleaning direct be ready our processing from into that and inject a and -- having up or line from taking and the waste, inject guess it third-party that anaerobic opportunity it's basically it system. our another a to whether second buying buying into plant

we we we'll to that work that with the continue authority do regulators believe as something ensure But So page have this. it's that is now. to to we with our forward again, all go on same everybody

Pat Migliaccio

This Migliaccio. is Pat

we've capital and and the two total pilot Day. the million we years a RNG Analyst one over support base potential at reminder that opportunity. investments rate the Those million a a only between CAGR $XX about $XX perspective, as talked our planning project hydrogen and ultimately from Just next included double-digit

Gabe Moreen

Got were it. those midstream everyone. side little then a LNG maybe pricing some the on some just can just talk you're has of expectations contracts of things. winter mostly And all those I the Thanks Leaf what to maybe think about you bit River? if you prompted seeing Do prior sort And the Can of relative switch contracts relative whether uplift I'm these at by new of storm above? curious been contracts? to

Steve Westhoven

So to event in on a were basis But a forward prior the doesn't region. Uri for certainly, down motion number like any contracting of that in those occurring. extreme that facility an hurt

a an our probably making even ahead I valuable. little think what gas a contracts such River But bit existing energy more part it's similar mix turn to of Leaf as slightly think important were. reliable storages of becomes color become I of like will quick that just

of So the it's forward. certainly investment market in making we and supportive supporting River investment thesis overall, going essentially had the the very Leaf that for

Gabe Moreen

then for I can. And me last Great. one if

months over shifting to plan? here correctly, altering earnings alters it out I'm like things. If think just of Just not you the of sound you state? in CapEx is it can And next versus CEV state New whether speak the over the the Jersey the the call on your plan five-year in XX doesn't regulatory the landscape either landscape shifting hearing side significantly trajectory or

Steve Westhoven

it alter doesn't No, it.

XX you think install I megawatts want been we been Jersey megawatts years. if they over we've XXX solar here XXX about quite some New of over installing about look is the of target typically, supporter the has per to past expect what year. per And a it's capacity period for time. at that year strong And

that I we'll out in able that that a the to itself. that's expect we're the participate So rolling programs for statement optimistic they're And that think and we be future.

we're in any guidance change So due we've given past this. not the expecting to that in to

Gabe Moreen

Thanks, Great. Steve. everyone. Thanks

Steve Westhoven

Gabe. Thanks,

Pat Migliaccio

Thanks, Gabe.

Operator

Thank you.

from Please Our the next Miller question Morningstar. go of Travis from ahead. line is

Travis Miller

Good morning everyone.

Steve Westhoven

Hey, Travis.

Travis Miller

project-specific outcome medium-term in capital Assuming the you either the or regulators on plan tracker for thought some or a rate as rate going like of something look what's relief in potentially back of of type had constructive and your timing that? even case to you kind

Steve Westhoven

I'm ask Mark to answer going Kahrer, So question. that to

Mark Kahrer

that next That's into that we the case substantial case. respect may at of basically That Day. working as we're of could we're have, the of system. Successor next our was where capital SAFE frame. II are and program, management XXXX somewhere other the a what IT asset that look we projects think on upon the So look might customer timing taking our like. the time system rate program base to Investor both information our XXXX With we out rate up replacement expanding Travis, assessing trackers the We wrap infrastructure in now right a completion the contingent

right So the we that code . pipe cathodically vintage disaster existing code protected. now do is It have where

of of that well. both the So and assessment the tracker we're that timing the as of infrastructure assessing that timing and timing

Travis Miller

is And then something you you system. Okay. there's think the put incorporation question cases? that regulatory or base previous just those in that to about type on rate of Great. supports the of foresee products, hydrogen through follow backing tracker future going or a up to for Do the

Steve Westhoven

itself fuel So Governor's and Energy Travis and stream customers. aligns it to our our deliver the I mean with decarbonizing it certainly Master Plan certainly

some now. customers. process be ongoing case for the a got receive the So to our answer is through And should active. that with we we're and rate the that I alignment that an to that's project optimistic to certainly think we're due that administration working question, treatment We've able the that regulatory way of

Travis Miller

or right rate -- if a you Would gas Okay. tracker potential in already going real on the And just then that that's like have now about anticipate case, you a stuff you future putting project that? see clarification. talked powered the quick

Steve Westhoven

rate part hopefully will of That this year. of filed case calendar the project that end is our conclude at

Travis Miller

Okay, so Thanks great. much.

Steve Westhoven

Thanks, Travis.

Pat Migliaccio

Travis Thanks,

Operator

you next Julien Partners. very Instructions] the from from line [Operator Smith Thank much is question Our of Guggenheim

Kody Clark

it's actually Bank of America Kody from Clark, it's Hey here.

Steve Westhoven

Kody. Hi,

Kody Clark

And XX% we thinking think assuming factor think I'm just to I about can going if that then maybe going out forward level assuming from mix wondering, And on you I you're that how go that So are the previously, this revenue Solar with are you you're does X.X TREC I quickly. TRECs. going for XXXX the of assuming? back program new was What you change Successor guess, of incentive around it What through kind mix had incentive forward. level? revenue projects? new forward? how And --

Steve Westhoven

So on with Pat details factors. can TREC answer the Kody, the question

Pat Migliaccio

Pat it's Migliaccio. Kody, Yes.

obviously, number a the think are program. various underneath I there incentives Successor of

outside sourced And the within as New Jersey, have XX% our roughly New been Analyst assumption Jersey. of we've XX% so projects of prior our Day baked was that would that of in

majority assumption. As continued program that to of we IRR. Ultimately seen X% to projects date of that those leaving are direct state. the out the our investment. supportive to end we've that what preserve we're The returns it actually the X.X% a of planning state XX% the to communicated broadly that get achieved Successor is projects in going was And closer the us investments towards day of allow at and is

getting to that about just think to level question if I here, which a you're get you that modeling to support that's think X% so X.X% the to is IRR. And you way

Kody Clark

then what the forward? share of we've goal And just New what then assuming historically it. kind been versus XXX has in XXX-megawatt that going Jersey Got you've seeing and market XXX-megawatt Okay. you're that megawatt that what seeing of level on historically wondering, outlined

Steve Westhoven

I think we've share. been about of the market historically XX%

ends doing So and for solicitation informed how everybody progress be see it participating BPU a will we'll The how But large we'll up in things out. keep certainly doing. projects playing as that. we're we'll be

Pat Migliaccio

Got it.

with narrowed Okay. estimates it And the everything? confidence to that range? commercial And you on being Energy that, side that? and stick just driving that How seen you that is the but looks What's of able with we've into to to freight being like narrow backdrop sorry and solar inflationary your Ventures CapEx second kind quarter-over-quarter. are the CapEx here Clean then your and seeing how then panels playing

Steve Westhoven

I'll So -- on to going take and the motioning who's Pat I were question.

second far So part question the of the the I'll take inflationary. as as

at the I for projects the as look it guess, you purchased majority as that have up have the we we next or largely in pipeline the far years two if locked the of goes. So materials

So into any point. are into XXXX -- we'd inflationary the dipping at we're late XXXX pressures there of kind if or that be early

the As you range, CapEx far as guided narrowing that? the Pat would want take

Pat Migliaccio

Yes.

So range identified back terms it of projects XX% to over Kody we've pipeline. that really the ties narrowing in got in the the of fact the

line So a clear projects of those sight on they'll cost. what look like what

capital the in to the of plan. narrow us the range confidence pipeline And so allows that

Kody Clark

so your time. understood. for much Okay, Thanks

Steve Westhoven

Kody. Thanks,

Pat Migliaccio

Thanks, Kody

Operator

much. very you Thank

there Please are the presenters. further conference no over go hand the now to ahead. I As questions,

Dennis Puma

Okay. Thank everyone for you, Zed. us I want joining thank this morning. to

replay available As call this for a of reminder on is recording a our website.

your interest Resources. appreciate and always New Goodbye. everyone. As safe stay Please investment Jersey we in

Operator

concludes much. call. conference very today's you and this gentlemen Ladies Thank

You you. Thank may disconnect your lines. now

New Jersey Resources (NJR) 8 Aug 212021 Q3 Earnings call transcript